Life Insurance: A Smart Investment
by Alicia Wanek | Staff Writer
While life insurance is widely recognized as a crucial means of safeguarding our loved ones, there are several advantages of obtaining a policy that you might not have previously considered. Bobby Davidson, a local independent insurance agent, offers insights:
Tax-Free Death Benefits
Life insurance provides a tax-free death benefit. The amount of the policy is what your beneficiaries receive, and typically, it is not subject to income tax.
Growing Cash Value
The cash value of a permanent life insurance policy appreciates over time. “The average policy reaches its cash value equivalency in about ten years,” explains Bobby Davidson, local independent agent. The value continues to grow thereafter.
Investment for Children’s Future
Buying a policy for kids is an investment in their future. Many grandparents opt to buy policies for their grandchildren. However, Davidson cautions that it’s a great gesture only if the grandparents have secured their own financial wellbeing first. A life insurance policy can guarantee insurability for children. Should a child encounter a serious illness, such as cancer, they may be unable to secure life insurance later on, regardless of their health status at that time. Certain policies offer options to purchase more coverage at set intervals, regardless of health changes.
Credit Protection
Funds in permanent insurance policies are fully safeguarded from creditors.
Estate Tax Advantages
If your wealth accumulates significantly, the value of your insurance can help address estate taxes. This is particularly relevant for those whose estates are substantial enough to be taxed upon death, and is worth discussing with an insurance agent if it may concern you.
Premium Flexibility
“If structured properly, you may have the option to stop premium payments while the policy remains active,” Davidson clarifies. Over time, it might be possible to utilize dividends to cover premium payments, which can be particularly advantageous post-retirement.
Emergency Cash Access
The cash value of your policy can be accessed in case of emergencies. If you hold life insurance but lack other investments, you can cash in the policy. This should be reserved for genuine emergencies, but the funds are available if necessary.
Long-Term Care Benefits
A policy with a long-term care rider can help cover expenses for extended care, like an assisted living facility when needed.
Life Insurance and Financial Security
Life insurance can effectively enhance your financial portfolio, yet its main function remains to protect your loved ones after your passing. “You would be surprised by how many individuals neglect proper planning for life insurance and wills,” notes Bobby. Unfortunately, the harsh realities often reveal the biggest lessons. Bobby recalls a case involving a man in his early thirties with a family. He chose not to acquire a $1 million policy, despite health concerns indicated by his physical exam. Six months later, he passed away without any coverage. Subsequently, his widow went on a trip to the Bahamas to cope with her loss and tragically also lost her life in a moped accident, leaving their children without any support. It’s clear that our children are our most valuable asset. Davidson is dedicated to ensuring they are protected. He provides a complimentary assessment known as a “360 Review.”
Finding the Right Coverage
“It’s essential to choose coverage that fits your family’s needs, and it can become complex and confusing without the right guidance,” says David Pidgeon, who highlights that Davidson consistently reaches out to him to update and modify his family’s policies throughout their 20-year partnership. “Insurance isn’t a topic people enjoy discussing,” Pidgeon emphasizes, “but it’s one we HAVE TO address.”
Contact Information
For further assistance, reach out to your insurance agent or connect with Bobby Davidson at 972.980.4884 or Bobby@davidsoninsservices.com for a complimentary 360 Review Consultation.
